Robert Finger

An economic assessment of drought effects on three grassland systems in Switzerland

This paper analyzes the economic impacts of summer drought on Swiss grassland production. We combine field trial data from drought experiments in three different grasslands in Switzerland with site-specific information on economic costs and benefits. The analysis focuses on the economic implications of drought effects on grassland yields as well as grassland composition. In agreement with earlier studies, we found rather heterogeneous yield effects of drought on Swiss grassland systems, with significantly reduced yields as a response to drought at the lowland and sub-alpine sites, but increased yields at the wetter pre-alpine site. Relative yield losses were highest at the sub-alpine site (with annual yield losses of up to 37xa0%). However, because income from grassland production at extensive sites relies to a large extent on ecological direct payments, even large yield losses had only limited implications in terms of relative profit reductions. In contrast, negative drought impacts at the most productive, intensively managed lowland site were dominant, with average annual drought-induced profit margin reductions of about 28xa0%. This is furthermore emphasized if analyzing the farm level perspective of drought impacts. Combining site-specific effects at the farm level, we found that in particular farms with high shares of lowland grassland sites suffer from summer droughts in terms of farm-level fodder production and profit margins. Moreover, our results showed that the higher competitiveness of weeds (broad-leaved dock) under drought conditions will require increasing attention on weed control measures in future grassland production systems. Taking into account that the risk of drought occurrence is expected to increase in the coming years, additional instruments to cope with drought risks in fodder production and finally farmers’ income have to be developed.

Farm management decision and response to climate variability and change in Côte d’Ivoire

This paper investigates threats to farm management in the northern and central region of Côte d’Ivoire, with a particular focus on climate-related threats. To this end, farmers’ perception and adaptation strategies for climate change have been analyzed. The data were collected from 205 respondents by means of the Focus Groups method, and they were evaluated using a framework analysis. The main reported threats related to the implementation of farming activities are the high cost of inputs and the lack of technical support, which are followed by diseases, insects, and climate variations (scarcity of rains, strong winds, and high temperature). We find that most farmers have a strong perception of changes in climatic conditions. Their perceived impacts on the local environment through evidences like the disappearance of certain farming practices, occurrence of new insects, and the disruption of key time reference periods. Farmers mainly attempt to adapt by adjusting their agricultural calendar, adopting new short-season varieties, and using mixed cropping. We find that the most influential factors for farmers’ adaptation behavior is lack of contact with extension services and the scarcity of rainfall. Our suggestions for future agricultural policies for better adaptation to climate change are to take into account farmers’ perception, to provide suitable climate forecast, and to improve local technical support.

Alternative Specifications of Reference Income Levels in the Income Stabilization Tool

In this chapter, different approaches for the specification of reference income levels in the income stabilization tool (IST) are analyzed. The current proposal of the European Commission suggests a 3-year average or a 5-year Olympic average to specify the farm-level reference income that is used to identify if and to what extent a farmer is indemnified in a specific year. Using Monte Carlo simulations, we investigate the impact of income trends on indemnification if these average-based methods are used in the IST. In addition, we propose and investigate a regression-based approach that considers observed income trends to specify reference income levels. Furthermore, we apply these three different approaches to farm-level panel data from Swiss agriculture for the period 2003–2009. We find that average-based approaches cause lower than expected indemnification levels for farmers with increasing incomes, and higher indemnifications if farm incomes are decreasing over time. Small income trends are sufficient to cause substantial biases between expected (fair) and realized indemnification payments at the farm level. In the presence of income trends, average-based specifications of reference income levels will thus cause two major problems for the IST. First, differences between expected and realized indemnification levels can lead to significant mismatches between expected and real costs of the IST. Second, indemnity levels that do not reflect farm-level income losses do not allow achieving the actual purpose of the IST of securing farm incomes. Our analysis shows that a regression-based approach to specify reference income levels can contribute to bound potential biases in cases of decreasing or increasing income levels.

Risk considerations in the economic assessment of low-input crop production techniques: an example from Swiss wheat production

The role of risks in the adoption of low-input wheat production in Switzerland is investigated using farm-level panel data. Due to governmental support with environmental payments, low-input wheat production is found to be on average more profitable. However, low-input production is also more risky, in particular due to higher yield variability. The here presented analysis reveals that these production risks could become a decisive factor in farmers adoption decisions of risk-averse farmers if environmental payments were to be reduced or abolished.